Growth and volatility go hand-in-hand
Up and downs in KiwiSaver are normal
Have you noticed that your KiwiSaver balance goes up as well as down? This can be unsettling but is in fact normal as global events and government policies impact on financial markets, company profits, and property values. Staying the course and not panicking is generally the best approach for most KiwiSaver investors to achieve higher average returns over the medium to long term.
KiwiSaver is primarily a long-term term investment scheme that helps people save for a first home deposit and/or provides funds for retirement. Having a well-diversified mix of shares and property investments in your KiwiSaver typically provides higher average returns over the medium to long term. However, these types of investments also have more price volatility and the media sometimes use this to create fear and sell advertising.
Choosing and sticking to the right fund type
It is important to choose the investment fund type that best fits your KiwiSaver goal, investment timeframe, and money personality. Professional financial advice and tools like investor profilers can be very helpful for choosing the right fund type for you.
If your KiwiSaver investment goal or timeframe change, then this is a trigger to review your fund type. However, it is not appropriate to change fund types in response to alarming media stories, or friends telling you that now is the time to change.
Need more reassurance?
The Government Retirement Commission has a great article that goes into more detail on this topic based on Covid market disruptions that you can read here.
You will see that the advice is consistent with this blog post, “don’t panic, ups and downs in KiwiSaver are normal”.
